Monthly Archives: November 2016

This is likely to be the week that will confirm what the FOMC will do as they convene for their final meeting of 2016.

A year ago at this time, with whatever predicting power the members of the FOMC may have, they would never have predicted that there would not have been any interest rate increases prior to the final few weeks of 2016.

Their power to predict back at this time a year ago, was likely over-estimated.

Nonetheless, here we are.

This week we have a GDP Report and an Employment Situation Report and those should be the final bits of the equation.

You would have thought, though, that the FOMC would have been ahead of the curve.

Not only are those upcoming reports likely to suggest an ever strengthening economy, but the bond market has already effectively raised rates.

Just ask anyone in mid-mortage application.

With a decent amount of cash to begin this week and no expiring positions, I would ordinarily be interested in adding some new positions, but I do have 4 ex-dividend positions this week.

That may be enough reason to sit on the sidelines, but I think that if the GDP and the EMployment SItuation Report do point at a near certain increase from the FOMC, the response from investors may be a very positive one.

At least for now.

That’s what happened in 2015.

This time, though, I think it may continue for a while, as long as the increase is only 0.25% and the wording from the FOMC doesn’t suggest that another increase is right around the corner.

With that belief that there may be more to go on the upside, I’ll be looking for any opportunity this week, but will also be looking ahead for any chance to rollover positions expiring in a few weeks as the December 2016 option cycle comes to its end and I get ready to close out the books for the year.

MONDAY: The next few weeks will be focusing on the FOMC, but first we have to deal with this week’s GDP and Employment SItuation Report

TUESDAY: It looks as if it may be another quiet day today, but the rest of the week may have reasons to react, or at least convince itself that it has reasons to react.

WEDNESDAY: An increased GDP reported yesterday and who knows what comes on Friday, as the Employment SItuation Report is released? But most everyone knows what to expect in just 2 weeks as the FOMC meets and the market appears ready to accept an interest rate increase – as long as it’s a small one and doesn’t happen too often.

THURSDAY: OK. December. The final dash is underway.

FRIDAY:. Employment Situation Report comes this morning and could swing market toward gains if the numbers convince everyone that the uncertainty is over. Of course, if the numbers aren’t so good, the market hates newly sown doubt.

“SNEAK PEEK AT NEXT WEEK” APPEARS ON FRIDAYS

For anyone who is capable of remembering the sentiment that pervaded markets less than 3 weeks ago, the continuing shattering of stock market records day after day has to come as a surprise.

For those that had the conviction of their opinions, and there were some very prominent people expecting a sell-off in the event of a Trump victory, you have to wonder whether it was worse to miss out on the rally or worse to have been so wrong while in the public eye.

As that watchful eye looked at the DJIA, S&P 500, NASDAQ 100 and Russell 2000, all ended the week closing at their all time highs.

Do you remember what happened when the FBI announced that they were looking into some emails discovered on a laptop owned by one of Hillary Clinton’s top aides? Do you then remember what happened when the all clear was then given just days ahead of the election?

The conventional wisdom was that the uncertainty associated with the unpredictability of a Trump Administration was the antithesis to what the stock market needed to move higher.

That conventional wisdom was certainly reflected in the stock market’s exaggerated movements.

Do you remember the worldwide overnight plunges when it appeared as if Donald Trump would emerge victorious?

And then a funny thing happened.

After a quick 500 point gain in the DJIA when all of those earlier convictions were thrown out the window, the market has just had a slow and steady climb higher.

This week had no new positions opened as the S&P 500 advanced 1.5%, or about 20% of the year’s gain.

I was, once again, though pretty happy with this week, even though I didn’t open any new positions.

More importantly, while conserving cash from the previous week’s assignments, there was again opportunity to put some idle positions to work with the sale of calls on 3 uncovered positions.

With one ex-dividend position and those 3 call sales there was some generation of income, but there was also the ability to keep up with the advancing market.

Existing positions actually bested the market by 0.1% on the week, adding to their very good performance in 2016.

On paper, anyway, they are well ahead of the 8.3% advance in the S&P 500, but I’m always reluctant to talk about things like that until the profits are booked and not just on paper.

There were no new closed positions this week, so performance of closed positions in 2016 goes unchanged, still sitting with only 27 closed on the year, but still hoping to at least make it to a paltry 30 by the year’s end.

This was another week with really not too much going on.

If anything, we just got one week closer to the FOMC’s next meeting and increasing certainty that there will be an interest rate increase at that time.

No panic, yet, and it’s looking as if there may not be any panic.

While we do hit these new highs, we’re not doing it in a way as to raise any eyebrows.

That’s exactly the way i
t was in 2007. We just wore higher and higher.

Nothing really spectacular, just hard earned positive days, but without those triple digit moves to make people giddy or nervous.

Because of that, I think that we are still headed even higher, unless something stunning happens in the next month or so.

Anything larger than a 0.25% rate increase, or anything that might question the validity of the Presidential election, could create some angst, but I’m not counting, nor hoping for either.

Next week does have the GDP and then the Employment Situation Report, nut unless they too have some really big surprises, there isn’t even anything any of the FOMC members speaking next week can really do or say to change investor sentiment.

With cash still on hand and with nothing on schedule for expiration next week, I take some solace in having about 4 ex-dividend positions. I wouldn’t mind a little bit of profit taking before considering spending any of that cash, but I’m very unlikely to go chasing the market if it moves higher.

If it does, I’ll just be happy to get some more paper profits and perhaps get a chance to sell some more calls or be in a better position to roll some positions over when the December 2016 option cycle is up for its expiration.

I otherwise expect to remain quiet again next week, but certainly wouldn’t mind another week like this one.